TMI Blog2012 (7) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... possibility of any debate thereon on such claim. As disallowance is made without giving an opportunity to the assessee to explain his view point in support of the deduction or allowance, and additional tax on the increased amount is charged from him arbitrarily neither proof in support of a claim can be requisitioned nor nature of expenditure can be judged in proceedings u/s 143(1)(a) no basis to interfere with the findings of the CIT(A) - in favour of assessee. - ITA No.67/Del. /2010 - - - Dated:- 22-6-2012 - SHRI A.N. PAHUJA, AND SHRI C.M. GARG, JJ. Assessee by S/Shri J.J. Mehrotra D.R. Rajan,ARs Revenue by Dr. B.R.R. Kumar, DR O R D E R AN Pahuja:- This appeal filed on 06.01.2010 by the Revenue against an order dated 30.10.2009 of the ld. CIT(A)-I, New Delhi, raises the following grounds:- On the facts and in the circumstances of the case the ld. CIT(A) has erred in:- 1. The CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in law and facts in directing the Assessing Officer to rectify the order passed u/s 143(1)(a) of the Income-tax Act by deleting the adjustment of Rs. 64,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the appellant under section 154 and the order of the D.C.I.T., Central Circle-I, Lucknow passed on the petition filed by the assessee under section 154. I have also gone through the assessment order passed under section 144 of the Income Tax Act dated 21.09.2001 and the appellate order passed by the CIT(A)-III, Lucknow in appeal no. 124/CC-I/Lko/2001-02 dated 01.05.2002. I have gone through the above documents and it transpires that the facts pointed out by the Ld. Counsel of the appellant, as stated herein above, appear to be correct. It is a well settled law that what was permissible, in the first proviso to section 143(1)(a), to be adjusted as per the law effective from the assessment year 1989-90 till the amendment of section 143(1)(a) in 1999 were:- i) only apparent arithmetical errors in the return, accounts or documents accompanying the return, ii) loss carried forward, deduction, allowance or relief which was prima facie admissible on the basis of information available in the return but not claimed in the return, and, similarly, iii) those claims which were on the basis of information available in the return prima facie inadmissible, were to be rectified/allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case, as mentioned herein above, I am fully in agreement with the pleadings of the ld. Counsel of the appellant and I direct the Assessing Officer to rectify the order passed under section 143(1)(a) by deleting the adjustment of Rs. 64,81,4611- made thereto. My findings are further, supported from the assessment order passed under section 144 of the Income Tax Act in which no additions were made' under section 43B of the Income Tax Act and the addition under section 37 was made on merits of the case and not because of the fact that prima facie bad debts claimed by the appellant were not allowable as deduction and In fact CIT(A) has allowed major portion thereof. 4. The Revenue is now in appeal before us against the aforesaid findings of the ld.CIT(A). The ld. DR while carrying us through the impugned order contended that the AO made the aforesaid prima facie adjustments on the basis of observations of the auditor in the tax audit report in annexure 1 and 3. In annexure 1, the auditor s report clearly mentioned the particulars of capital expenditure written off (debited under operational expenses). Since the assessee claimed capital expenditure in the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:-- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed." 6.1 It is evident from the aforesaid provisions that unless the return or the accompanying documents or accounts show that the deduction, allowance or relief claimed therein is prima facie inadmissible on the basis of information available in the said documents, such deduction or allowance claimed cannot be disallowed. Only those adjustments can be made under the said clause which on the basis of return and documents accompanying it are "prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction or allowance, and (b) additional tax on the increased amount is charged from him arbitrarily. This would not only be in total violation of the principles of natural justice, it will also be not in consonance with the spirit of the provision to cause minimum inconvenience to the assessee and at the same time put the assessee on guard against claiming inadmissible deductions and allowances. On the contrary, the above interpretation of section 143(1)(a) of the Act will not cause any prejudice to the Revenue. In a given case where the Assessing Officer has any doubt about the allowability of deduction or claim made by the assessee, it is open to him to issue a notice under subsection (2) of section 143 and have the evidence in support thereof. Similar view have been expressed on the subject by the Bombay High Court in Khatau Junkar Ltd. v. K. S. Pathania [1992] 196 ITR 55, the Calcutta High Court in Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496, the Karnataka High Court in God Granites v. Under Secretary, CBDT [1996] 218 ITR 298 and some other High Courts as well. 6.3 Hon ble Bombay High Court in Amitabh Bachan Corporation Ltd.,(supra) held that whether an expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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